Immigration reform is pro-growth and pro-equity

Congress returns to Washington this week with a long list of issues to work through. Because this is an election year, the window for any real action will close soon and won’t open again until Congress returns after the November elections. That’s why Members of Congress need to focus on the potential of legislation that’s already passed the Senate and has bipartisan support in the House—commonsense immigration reform—to help promote sustainable and equitable growth.

Immigration reform would in all likelihood boost wages for the approximately 11 million undocumented workers currently in the United States. These workers, now in the shadows, would be better able to avail themselves of legal protection. Research from the last time undocumented workers were given legal status found these workers experienced a significant increase in their wages.

Of course, a major debate surrounding immigrants and wages is their effect on the wages of U.S. citizens, particularly on the bottom rungs of the income ladder. But research shows that immigrant workers would not replace American workers, but rather complement native-born workers. For example, an immigrant who works as a certified nursing assistant would complement a native-born nurse.

The simple interactions of supply and demand suggests that an increased supply of workers would drive down wages. Harvard University economist George Borjas, a proponent of this view, has even titled a paper “The Labor Demand Curve is Downward Sloping.”

However, research shows that immigrants are on a different set of supply and demand curves than native born-workers. Employers see immigrants as a different set of workers than native-born workers, even if both are low-skilled. So increases in the pool of low-skilled immigrants doesn’t mean more competition for low-skilled American workers.

Economists Gianmarco Ottaviano of the Universita’ di Bologna and Giovanni Peri of the University of California, Davis took this consideration into account in a 2012 paper. They found that the wages of U.S. citizens, even those with less than a high school education, actually increased because of immigrant labor. Instead of replacing native-born workers, immigrants were complementary workers that boosted productivity. In economics jargon, immigrants are complements rather than substitutes.

The benefits of productivity gains due to immigration aren’t limited to boosting U.S. wages. Immigrants can also increase the overall productivity of the economy and spur long-run economic growth. A 2010 paper by Peri looked at state economies in the United States and found that immigration had a strong positive association with total factor productivity, or how efficiently an economy uses labor and capital to produce outputs. Peri isn’t alone in this estimation. When the non-partisan Congressional Budget Office evaluated the Senate-passed immigration bill, they found that total factor productivity would grow if the bill were to become law. And because productivity growth is the heart of long-term growth, the long-run growth prospects of the U.S. economy would improve as well.

Passing commonsense immigration reform in 2014 is certainly a long-shot. But members of the House of Representatives and the general public should be aware of this shrinking window of opportunity.